UPDATE – On December 31, 2019, Governor Andrew Cuomo vetoed the bill; however, he indicated that he intends to propose replacement legislation in 2020 to allow victims of wage theft to use “any and all assets, even personal assets, of the bad actor” to satisfy a judgement.

The New York state legislature has passed a bill that would allow employees making certain claims for unpaid wages to obtain a lien against their employers’ property for the value of the claim, inclusive of liquidated damages. If signed by Governor Cuomo, the bill would take effect 30 days after becoming law.

The bill would apply to claims involving non-payment of wages under both the federal Fair Labor Standards Act and the New York Labor Law (and associated wage orders), including claims relating to minimum wage, overtime, spread of hours, call-in pay, uniform maintenance pay, withheld gratuities, unlawful deductions from wages, or improperly taken meal and tip credits, as well as unpaid compensation pursuant to an employment contract.

Employees making such claims would be permitted to obtain an “employee’s lien” against the employer’s interest in real property and certain personal property, excluding “deposit accounts” or “goods,” as defined in Section 9-102 of the Uniform Commercial Code. Liens also could be obtained by the NYS Department of Labor or state attorney general against employers who are the subject of an investigation, court action, or administrative agency action, either on behalf of an individual employee or a class of employees.

Notice of a lien could be filed up to three years following the end of the employment giving rise to the wage claim. Within five days before or 30 days after filing the lien notice, the party seeking the lien would be required to serve a copy of the notice upon the employer, as well as affix a copy to any real property identified in the lien. The lien would extend for up to one year after the notice of lien is filed, unless an extension of up to one additional year is timely filed or action is taken to enforce the lien, in which case it would be extended during the pendency of such action and for a period following entry of final judgment. An employer would, however, be able to purchase a bond in order to discharge the lien at any time.

In the event that an action is not commenced to obtain judgment on the wage claim or to foreclose the lien, the lien would be automatically extinguished unless extended by court order. Further, should a court find that the employee willfully exaggerated the amount of the lien, the lien would be discharged and the employee would be restricted from obtaining another lien against the employer based on the same claim.

In addition to creating the new right of lien, the bill would, in connection with covered wage claims:

  • allow plaintiffs to seek an order of prejudgment attachment on an employer’s assets pursuant to Section 6210 of the New York CPLR, and require courts to hold a hearing on such a request within 10 days of the employer’s opposition; the bill also would limit the amount of bond that a plaintiff would need to post when seeking an attachment to no more than $500 (or allow a court to waive the bond requirement altogether);
  • provide employees and their agents with a right to access the minutes of shareholder meetings and records of shareholders, as well as certain information about members of LLCs, related to their claims; and
  • expand the potential personal liability for the 10 largest shareholders of non-public New York corporations, currently limited to the amount of unpaid wages in the event the company cannot pay, to also include liquidated damages, penalties, interest, attorney’s fees and costs.

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We will continue to monitor this bill and report on any further developments.

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Photo of Allan Bloom Allan Bloom

Allan S. Bloom is a nationally recognized trial lawyer and advisor who represents management in a broad range of employment and labor law matters. As a litigator, Allan has successfully defended a number of the world’s leading companies against claims for unpaid wages…

Allan S. Bloom is a nationally recognized trial lawyer and advisor who represents management in a broad range of employment and labor law matters. As a litigator, Allan has successfully defended a number of the world’s leading companies against claims for unpaid wages, employment discrimination, breach of contract and wrongful discharge, both at the trial and appellate court levels as well as in arbitration. He has secured complete defense verdicts for clients in front of juries, as well as injunctions to protect clients’ confidential information and assets.

As the leader of Proskauer’s Wage and Hour Practice Group, Allan has been a strategic partner to a number of Fortune 500 companies to help them avoid, minimize and manage exposure to wage and hour-related risk. Allan’s views on wage and hour issues have been featured in The New York TimesReutersBloomberg and Fortune, among other leading publications. His class-action defense work for clients has saved hundreds of millions of dollars in potential damages.

Allan is regularly called on to advise boards of directors and senior leadership on highly sensitive matters such as executive transitions, internal investigations and strategic workforce planning. He also has particular expertise in the financial services industry, where he has litigated and arbitrated cases, including at FINRA and its predecessors, for more than 20 years.
A prolific author and speaker, Allan was the Editor of the New York State Bar Association’s Labor and Employment Law Journal from 2012 to 2017. He has served as an author, editor and contributor to a number of leading treatises in the field of employment law, including ADR in Employment Law (ABA/Bloomberg BNA, Senior Editor), Employment Discrimination Law (ABA/Bloomberg BNA, Final Proof Editor), Cutting Edge Advances in Resolving Workplace Disputes (Cornell University/CPR, Editor), The Employment Law Review (Law Business Research, U.S. Chapter Author), and The Complete Compliance and Ethics Manual (SCCE, Chapter Author).

Allan is a member of the NYSBA’s House of Delegates, sits on the Executive Committee of the NYSBA’s Labor and Employment Law Section, and is a Fellow of the College of Labor and Employment Lawyers. He has been recognized as a leading practitioner by Chambers since 2011.

Photo of Laura Fant Laura Fant

Laura Fant is a special employment law counsel in the Labor & Employment Law Department and co-administrative leader of the Counseling, Training & Pay Equity Practice Group. Her practice is dedicated to providing clients with practical solutions to common (and uncommon) employment concerns…

Laura Fant is a special employment law counsel in the Labor & Employment Law Department and co-administrative leader of the Counseling, Training & Pay Equity Practice Group. Her practice is dedicated to providing clients with practical solutions to common (and uncommon) employment concerns, with a focus on legal compliance, risk management and mitigation strategies, and workplace culture considerations.

Laura regularly counsels clients across numerous industries on a wide variety of employment matters involving recruitment and hiring, employee leave and reasonable accommodation issues, performance management, and termination of employment . She also advises on preparing, implementing and enforcing employment and separation agreements, employee handbooks and company policies, as well as provides training on topics including discrimination and harassment in the workplace. Laura is a frequent contributor to Proskauer’s Law and the Workplace blog and The Proskauer Brief podcast.